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Reverse Mortgages in Canada: CHIP, Equitable Bank, and the Real Cost

A reverse mortgage allows Canadian homeowners aged 55 or older to convert a portion of their home equity into tax-free cash without making monthly payments. The two providers in Canada are HomeEquity Bank (CHIP) and Equitable Bank (Flex Reverse Mortgage). Maximum borrowing is up to 55% of the home’s appraised value, with the actual percentage scaled by the youngest borrower’s age, property location, and lender risk assessment. A 60-year-old in Vancouver might qualify for 30% of home value, while an 80-year-old in Toronto could access 50%.

The defining feature — and the catch — is that interest compounds against the principal because no payments are required. Rates are typically 2–3 percentage points higher than a conventional mortgage. At 7.5% compounded semi-annually, a $200,000 reverse mortgage balloons to roughly $416,000 after 10 years and $866,000 after 20 years. If home values rise at 3% annually, a $750,000 home grows to about $1.35 million in 20 years — meaning the loan can consume a substantial share of estate value even when housing appreciates. Canadian reverse mortgages do include a No Negative Equity Guarantee: heirs are never responsible for any shortfall if the home sells for less than the balance, provided contract terms (e.g., maintaining the property and paying taxes) have been met.

CHIP Reverse Mortgage Rate Table (June 2026)

Before signing a reverse mortgage, compare the alternative: selling the home, downsizing to a smaller property, and investing the difference in a diversified portfolio inside your TFSA and RRIF. For many seniors, downsizing preserves more wealth than a reverse mortgage because compound growth on invested funds typically exceeds compound borrowing costs. Independent legal advice is required by both Canadian lenders before funding — use that meeting to model multiple scenarios. Reverse mortgages best fit homeowners who want to age in place, have no realistic downsizing option (rural areas, attached to community), and treat home equity as a backstop rather than an inheritance.